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Written and Published by:

Michael S. Jenkins

STOCK CYCLES FORECAST


P.O. Box 652 Cathedral Station PO, New York, N.Y. 10025-9998 WWW.StockCyclesForecast.com Volume 26 Issue 17
__________________________________________________________________________________________________
April 25, 2011 Dow 12,480

Culmination Run: April 29-May 13

The last bull run is now underway and most secular bear markets in history rarely go past
two, to two and a quarter years before resuming their downtrends. Many cycles suggest the last
week of April to the first week of May as the end, or at least the start of a three month
intermediate term decline of 20 + per cent. The chart below shows the two recent tops on the
S&P pointing backwards in calendar days to the 2007 tops, and a 'foldback' from the November
midpoint suggest the typical top being a mirror of the bottom in wave structure.

While many believe that long term bull markets just arise out of a very bad bear market
decline, within the framework of a very long (19 year) Secular Bear Market, the historical
precedents are that the legs of the cyclic bull phase rallies rarely go past two years or a little
more. Certainly the Middle East turmoil, currency instability, and the ever present fears of a
Greece, Portugal, Ireland... collapse is more symptomatic of an ongoing long term bearish
environment then a new secular bull run. In any event strategy is to assume the worst at the end
of the current rally and be out on any swing low violation like 1270, but the early warnings
Stock Cycles Forecast April 25, 2011 Page - 1 -
would be failures at or return below the February top area of 1330-1340. Also note the nice
quarterly harmonics of a November top, February top and now May along with the hugely
significant May 2008 top being three years back when oil was last in the giant spike phase.
Support and resistance is always important but the 'patterns' of time repeat with similar
cycles so our basic analysis should be to incorporate past cycles that may be similar. Below are
many common years that usually have some repeating characteristics each year. Note the 7 year
tops in March and April with August low, but most all others top in May and go down to
August and later. This is a big warning so watch the old leaders for failure to lead any further on
the upside.

Of all these cycles only the 1949 low (60 year) that corresponded with our March 2009 low
was a long term secular bull run but still had a February top and early May 1951 top with a
significant decline for a couple of months. All the others were much more bearish patterns and
the composite of them all would indicate two years of declining markets once this run ends. The
other 'exception' to the very bearish cycles was the unusual bounce from the 1973-1974 decline
to the 1976 top that came all the way back before drifting down for another five years. That did
take place within the framework of a secular bear that lasted from 1966 to 1982 so the double
top high in 1976 would not negate an institutional stampede to 1500 again on favorable labor
market news or something and still be in a long term secular bear trend. Strategy must therefore
emphasize breaks of swing lows to confirm bearishness.

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Trader's Tip: The Time Conversion Bar: TCB
In my ‘Basic Day Trading' book I introduced the world to my discovery of the ‘Time
Conversion Bar’ or TCB, as a simple but very effective way to scale a chart so the time and
price components of any chart can yield its unique support and resistance. You see, to make a
market reversal you need BOTH a harmonic meeting of the time and the price so there is a one
to one relationship, or a strong proportional relationship of time to price. In theory on a
perfectly scaled chart the units of price would always be equal to an equal number of time units
at every high or low. We can't scale charts that way but if we assume that the time period of a
low to a high is equal to a price ‘bar’ or time unit, then we can invert the horizontal time
distance into a vertical measurement and get a ‘price' unit that will harmonize with the chart.
The way to do this is to take every horizontal time measurement and turn that distance ‘vertical’
while at the same time taking all vertical price drops or rallies and turning them sideways to get
a ‘time’ measured unit. The quickest way to do this on a chart is to draw a circle around the
time length or price movement since the radius of a circle is equal at all points and we can then
take that radius measurement and turn it 90 degrees. This is shown in the chart below which I
demonstrated to the public in Milan at my recent seminar.

In this chart above, each price drop is turned ‘sideways’ into ‘time’ and placed at the
subsequent low as a starting point, and each horizontal time distance from a low to high or high
to low is flipped ‘vertical’ to turn it into a ‘price’ bar. Note that that the end of the price flipped
bars, the cycle tops or bottoms came out and at the ends of the vertical flipped price bars we

Stock Cycles Forecast April 25, 2011 Page - 3 -


find support and resistance. If you do this in sequence for all swings you will usually get a
‘final’ common dominator of several cycles all coming out at the same time and often the same
price levels. This is seen in the next chart which summarizes my current view on the S&P
looking for a big top from the April 29th to May 13th time period and prices perhaps as high as
1372 or 1414. Note that after those arc breakdowns, the market would not find support until
they hit the big lower circle from the all time high to all time low which extends out into 2013
but only provides support at the 1050 level or lower for the next year. Curiously a 'foldback' to
July 2007 ( being the current top) to the March 2007 low is almost the identical measured move
from our current arc side to the lower 'big' one of support so that may be the size of the coming
correction. Note that the circle that goes 'vertical' near April 29th is that very connecting link to
the February / March 2007 time period.

Also note that the 'escape' from the arc in March 2010 led to a last leg to April 2010 which
stopped exactly at the top of the circle and at the 3 o'clock position of culmination on the circle.
Our current circle looks identical so it could in theory go to that 1414 top BUT the vertical arc
section is just ahead so as time runs out, if there is no momentum to prices they could top at any
level.

Below is a TCB approach to Oil. The first correction gives rise to a TCB bar in time near
August and an upper price range of 117 to 122.36. That pattern also 'looks like' a nice 'A' 'B' 'C'
upward correction within a longer term downtrend after the 2008 top.

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Gold has a series of 'doubling' patterns since the 1999 low and we are in the last section
with a final top of 1672 projected BUT now at the strongest 50% resistance within that last
section. This is near 1497 give or take and the only support is 1410 and 1322.

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US Steel is a basic industry and a key name for any global recovery. It's spent the last two
years in a rather flat base and is declining to a potential higher bottom if it holds here at the
edge of the TCB circle from the last low to high leg. A major intersection in June of the large
TCB's shows a resolution- either the last low, or a big rally now towards that area and then back
down. Since this stock is so cyclical and also housing related it's a good name to watch.

Stock Cycles Forecast April 25, 2011 Page - 6 -


Ford, above, is another cyclical and this is one of the better acting cyclicals but the auto
industry is still suspect until the labor market shows strong month over month employment
gains. Even so this chart suggests a multiyear advance and Ford is now at the pivot and could

see further consolidation but dips can be bought with stops for price targets well into the
twenties.
The Euro, above is also at major resistance from 1.45 to 1.47 and like gold and oil will
probably top before starting a last leg to 1.67 late this year or next. Everyone is bearish on the
Dollar but sometimes the masses are trapped at the top and this is a 5 wave up pattern which
could easily see an 'A' 'B' 'C' downward correction to 1.38 to 1.31.
Cyclic curiosity: This letter is only the second one late by a few days in the entire 26 years I have been
publishing it. The other time was EXACTLY 20 years less 45 days ago, on my honeymoon with my wife where
we visited the exact same cities in Italy (?)!

The following stocks have cyclic turns during the next three weeks.
POT FCX MMM CSCO PG GE $DXY AXP CAT EK
4/26 4/26 4/26 4/26 4/26 4/26 4/27 4/27 4/27 4/27
APA ASA FLSR UTX GM TXN PFE PEP MCD NEM
4/27 4/27 4/27 4/27 4/29 4/29 4/29 5/02 5/02 5/02
MSFT RIMM BA ADBE MRK DNDN MA MSFT INTC CSCO
5/02 5/02 5/02 5/03 5/04 5/05 5/05 5/06 5/09 5/09
HD CAT RIMM AA CVX GS MSFT DIS GOOG
5/09 5/13 5/13 5/13 5/13 5/13 5/13 5/13 5/13

Stock Cycles Forecast April 25, 2011 Page - 7 -


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April / May Activity Calendar

DATE UP /DOWN DAILY WEEKLY HOURLY


DAY
26 U 2
27 U * 3
28 D 10
29 D 1
May 2 U * * 10
3 U 12
4 D 2
5 U 11
6 U * 10
9 U 11
10 U 11
11 U * * 11
12 U 2
13 D 12
Notes: U means up day, D means down day. Trend changes indicated by the * will generally be more accurate
than the frequent U/D day indications and will usually trend in the same direction until the next *. Hourly turns
are given in local New York City (Eastern) times, i.e.10=10 AM EDT.
Summary
The market has doubled and most markets in history top at that point.
Many big cycles this year top in March and April but many more in May
with big lows in August and September so it looks like a three month
correction of 20% coming up very soon. Likely dates are April 29th and
May 13th. Prices are 1372 and 1414 with a breakdown below 1321 going
all the way down to 1168 and eventually 1040.
On the website: for $20 US, (or $30 Non US), you can order
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Stock Cycles Forecast voicemail telephone number is (212) 866-2934, but I rarely answer phone messages.
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mjenkins@stockcyclesforecast.com. The information and statistics as well as the original theoretical concepts utilized in this report are presented solely on the
basis of the writer’s interpretation of such factors and may not reflect specific knowledge or fundamental analysis of any of the companies mentioned. Any opinions
expressed are subject to change without notice. Neither the information nor any opinion-expressed herein constitutes a representation or solicitation for the purchase or
sale of any security. From time to time the publisher, his associates or members of his family may have a position in the securities mentioned in this report.

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